AUSTIN HOME VALUES: UP OR DOWN THIS YEAR?

A house in suburban North Austin, TX. Home Values may fluctuate over the course of 2023.

The family home or professional’s condo, couple’s townhouse or cowboy’s ranch is probably the largest investment of a lifetime, the biggest asset in a portfolio. While home prices often reflect lot size, square footage, luxury materials, curb appeal, age, condition and neighborhood amenities, the big dog in the game is supply and demand. All of this can greatly affect Austin home values over the course of this year.

Austin has been experiencing growth over the past several years not seen in many areas of the country. Warm weather, the absence of state income tax, contemporary lifestyles, natural beauty, recreation and abundant job and business opportunities have propelled its population growth by 33% in the decade ending 2020, topping 2.2 million residents. According to the Austin Chamber, the current decade’s growth is projected to exceed 25%, yet not likely to reach 30%.

Austin Job Growth and Home Values

In recent months, around 60,000 available job postings can be found in a wide variety of businesses, industries and services. Growth impacts not only municipal services, park use and traffic, but everyone moving to town needs a place to live. From luxury homes in planned communities with appealing amenities, and high-rise condos downtown to bungalows, cottages and older homes in charming neighborhoods, there is a place for everyone…for a price.

Austin Home Values Over The Past Three Years

The median listing home price in Austin was $600,000 in January 2023, or $351 per square foot – up 9% since last year. The median price is the one where half of the other asking prices are higher, and half are lower. Downtown Austin property tops the price chart for price per square foot at $936, and the Tech Ridge and Bluff Springs neighborhoods come in around $262 per square foot. The majority fall in the middle of those when using price per square foot as a value tool.

Home prices escalated unexpectedly and quickly during 2020 and 2021, which continued into 2022. Mortgage rates were low, adding fuel to a buying frenzy for primary residences and investment property. There’s always some sort of correction in the stock market and housing sector after values soar, and that has come to roost over the past 12 months.

Why the Austin Home Market is Appealing

The Austin market, however, may buck the trend because of the continuing appeal to people disgruntled with their current residence – not especially their house, but the state where they live, its policies, and taxes which impact their paychecks and quality of life. For those not settled into a career path or not committed to their employer for the long-term, moving to Austin for a new start can be tempting.

As mortgage rates nudge upward, already double (at 6.6%) from January 2022 (3.2%), the housing market slows. Some buyers go the rental route or stay in their current house, maybe undertake a major renovation rather than look for a larger or smaller property. With fewer buyers in the market, sellers anxious to sell may not command top dollar. People who have accepted a job or promotion elsewhere must sell their Austin property in order to finance a new one. Older folks ready to downsize are eager to sell once the decision is made. Those reasons provide an impetus to consider all reasonable offers, remembering the ubiquitous quip: A fast nickel is worth more than a slow dime.

Zillow, the real estate marketplace founded in 2006, conducts myriad surveys and research. Its current wisdom barometer points to most regional markets enjoying an uptick in home values. Yet, Goldman Sachs, a leading investment banking and management firm founded in 1869, predicts Austin home values will decline in 2023. For everyone who says po-ta-toes with a long “a”, which rhymes with pay, there’s someone else who says po-ta-toes with a short drawl “a”. that rhymes with pat. Such are the home value forecasts for 2023.

Austin: A Potential Buyers Market?

One report on realtor.com suggests that Austin is a buyer’s market now, pointing to the supply of homes being greater than the demand. This can occur when houses are on the market longer, and new ones are listed when old ones haven’t moved. Realtor.com offers that the average time on the market in Austin is 62 days. Another source indicates 102 days.

The location of a house can have a significant impact on home value. Some neighborhoods once in a rural locale, may find themselves in a suburban environment as shopping centers are built and companies move their own headquarters or satellite offices or manufacturing plants nearby. Now the homes may be worth a lot more for proximity to work and shopping.

Supply and demand, mortgage interest rates, personal goals, financial position, house condition and location, along with [buyers] job stability, all mix together to influence home values up or down. There is no crystal ball to know which direction the Austin market will flow or when it will change direction, much like the breezes in Windy Point Park.

Any questions? If so, give us a call at Habitat Hunters, and we can help break all this information down for you.